Court Strikes Down NLRB Rule Mandating Union Posters

In early May, a federal court of appeals struck down a controversial National Labor Relations Board (NLRB) rule that would have required employers to post information informing their employees of their rights to unionize. The court noted that the National Labor Relations Act ensures an employer’s right to free speech as long as the employer does not use threats. The court reasoned that this gave employers the right to remain silent. Therefore, the court ruled that mandating the posters would be the equivalent of mandating speech and violated the employer’s right to remain silent. At this point, the NLRB’s only chance to save the rule is an appeal to the Supreme Court. Read a copy of the opinion here.

National Association of Manufacturers v. NLRB, No. 12-5068 (D.C. Cir., May 7, 2013).

Automobile Manufacturer Not Held Liable for Dealer’s Actions

The Oklahoma Court of Appeals recently ruled that Ford Motor Company was not liable to customers for the fraudulent actions of one of its dealerships. The dealership in question had forged checks and failed to deliver vehicles, leading to lawsuits by several customers. At trial, the customers won on a theory of apparent agency, arguing that Ford’s actions led them to believe that the dealership was acting as an agent of Ford rather than as an independent dealer. The appellate court overturned this ruling, however, finding instead that customers could not reasonably have believed that the dealership was acting under Ford’s authority.  Although Ford’s internal documents showed a more substantial connection to the dealership, the court said that the documents could not have induced reliance on the part of customers because it was not observable by customers at the time of sale.

Thornton v. Ford Motor Co., 297 P.3d 413 (Okl. Ct. App. 2012).

Class Action Waiver in Arbitration Clause Upheld

In a recent case involving a challenge to an arbitration clause in a Shuttle Express franchise agreement, the Fourth Circuit held that the arbitration clause was enforceable even though it included (1) a class action waiver, (2) a fee-splitting clause, and (3) a one-year limitation on any suit, arbitration, or action relating to the agreement.

The validity of the class action waiver may be of special interest to franchisors. Disagreeing with the district court, the Fourth Circuit ruled that the Supreme Court’s decision in AT&T Mobility LLC v. Concepcion prohibited finding an arbitration agreement unconscionable simply because it included a class action waiver. The fee-splitting clause was upheld because there was not enough evidence that the cost was prohibitive, and the court declined to rule on the merits of the one-year limitation because it was not part of the arbitration agreement itself.

Muriithi v. Shuttle Express, Inc., 712 F.3d 173 (4th Cir. 2013).

Court Dismisses Class Action Against 7-Eleven

A federal district court in California ruled that a class action brought against 7-Eleven by former franchisees was barred by the release of claims the franchisees signed when terminating their franchise agreements. The lawsuit, which sought to recover excise tax refunds from the franchisor, was dismissed when the court held that a California statute invalidating releases of claims did not apply to the franchisees. The statute nullifies contracts that exempt a party from liability for future intentional wrongs or gross misconduct, but the franchisees construed it as including intentional acts of withholding property as well. The court rejected their argument, ending the case.

Grayson, et. al. v. 7-Eleven, Inc., Case No. 09c1353-GPC(WMC) (S.D. California 2013).